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A stock's price per share is $20. A shareholder invests $5,000 in the stock. The shareholder borrows enough money, so that his debt/equity ratio is

A stock's price per share is $20. A shareholder invests $5,000 in the stock. The shareholder borrows enough money, so that his debt/equity ratio is 1.25. The firm earns $3.50 per share in 1 year. The shareholder pays 8% annual interest on

its borrowing. What is the shareholders Return on Equity?

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